Richard Branson is to launch an internet bank in a move designed to exploit public disgust with Britain's big banks in the wake of the credit crunch.

Branson follows Tesco, which is also planning to capitalise on disenchantment with traditional banking via a big push into financial services.

The entrepreneur will act through his Virgin Money subsidiary, which is headed by Jayne-Anne Gadhia, a former boss of RBS's mortgage division and marketing director of Norwich Union.

Virgin Money is understood to be poised to apply for a banking licence from the Financial Services Authority to allow it to take deposits and offer mortgages for the first time. Branson is talking to US investment banks and other investors about financial backing.

He is also talking with advisers about more ambitious plans that could see Virgin launch a bid for Northern Rock, if the government decides to sell part of the bank back to the private sector before the general election in May 2010.

Credit Suisse, the Treasury's financial adviser, is thought to have sounded out potential buyers in recent weeks. Virgin Money failed in an earlier bid to acquire Northern Rock, which was nationalised by the government in early 2008.

Virgin is looking at three options: launching a new bank, complete with a branch network; entering a partnership with another financial player; or buying a stricken bank, such as Northern Rock, as part of a larger consortium.

Virgin Money is shortly to announce that sales leapt from £70m to around £100m in 2008. Profits are estimated to come in at £30m.